Benefit cuts, Europe, gay marriage – 2013 heralds ever deeper divisions among the Tories and opportunities for Labour, but only if Ed Miliband has the courage to seize the initiative.

It got easier in 2012 to imagine Ed Miliband becoming Britain’s next prime minister – but not at the same rate as it got easier to imagine David Cameron losing the next general election.

The coalition is shedding credibility faster than the opposition is acquiring it. Labour enjoys a consistent lead in the opinion polls yet even senior figures in the party believe that this expresses contempt for the government more than enthusiasm for a clear alternative. The coalition subsists on grim acquiescence to its economic policy. Specific budget measures are despised but it is widely understood that some pain is inevitable. The belief runs deep that austerity is our penance for the sins of economic mismanagement committed by Labour.

Smaller parties are mopping up spare votes. George Galloway’s Respect Party snatched a byelection victory from Labour in March; the UK Independence Party has enjoyed a more sustained surge, jostling with the Liberal Democrats for third place in national opinion polls. The political pendulum that once swung at reliable intervals between left and right is lurching on every axis.

Cameron failed to win a majority in 2010 because too many people in Britain – especially in urban parts of the north of England, in Scotland and among non-white communities – are culturally inoculated against voting Conservative. They doubt that the Tories can govern for the whole nation and suspect them of serving a wealthy few. Cameron won enough support to scrape in to Downing Street because a derelict Labour administration had forfeited the right to govern. The Liberal Democrats initially endorsed his claim to be a different kind of Conservative because it complemented their own belief that the novelty of coalition would lead to more profound political renewal. It didn’t. Now Nick Clegg has an explicit strategy to cast the Tories as heartless reactionaries, needing frequent transfusions of compassion and moderation from their junior partners.

A script of attack lines, ostensibly drafted for internal distribution but made public over Christmas, summarises the plan: “The Conservatives can’t be trusted to build a fair society,” wrote Tim Snowball, the Lib Dems’ director of communications. “Until the Lib Dems got into government, no one could stop the Tories from looking after the super-rich who fund their party, while ignoring the needs of normal people who struggle to make ends meet.” The Lib Dems have been pushing some variant of that message for over a year and it hasn’t yet done them much good. That doesn’t mean it is without effect in reinforcing negative perceptions of the Tories.

To win outright in 2015, Cameron must find a way to woo voters who were immune to his nebulous patrician charm in 2010. His coalition partners actively conspire to stop him deliv - ering that reassurance. So do backbench Tory ultras, increasingly vulnerable to the seductions of Ukip-style, hard-right populism. They unwittingly corroborate the Lib Dem story that the Conservatives need dilution in parliament to keep their fanatical tendencies in check.

There is a hard core of about 40 to 80 Conservative MPs who are, in effect, already in opposition. There is little Cameron could now do to neutralise their venom. Their ideological affinity with Ukip signals the emergence of something like a British Tea Party – a less extreme but similarly disruptive equivalent to the paranoid nationalist wing of the Republicans in the US. That tendency can only be provoked in 2013 by the Prime Minister’s determination to legislate in favour of gay marriage. His angriest MPs see this policy as an act of aggression, aimed at reasserting the leader’s cosmopolitan credentials in defiance of traditional Tory values.

Even without gay marriage on the agenda, the anti-Cameron insurgency will be easily sustained by developments in the European Union. The Prime Minister has no intention of engineering Britain’s exit from the EU or manoeuvring into a situation where departure looks inevitable (though that doesn’t mean he won’t end up getting there by accident).

Cameron will have to deploy diplomatic realism in European negotiations in 2013. Brussels summits will continue to focus on the single currency crisis rather than British demands for bespoke membership terms, which look, from across the Channel, like an isolationist tantrum. To have any chance of being taken seriously by his Continental peers, he must postpone and ultimately abandon the demand that old treaties be smashed open and fistfuls of sovereignty grabbed back. That retreat, in the eyes of hardline sceptics back home, will be the ultimate betrayal.

The British public may not be enthusiastic about the EU but voters will still be unimpressed by the sight of a governing party re-enacting an old civil war. Yet the Tories seem determined to revel in the quixotic passions that made them look unworthy of office in the mid-1990s. Of much greater concern to most voters and, by extension, the subject on which Downing Street strategists would rather focus their efforts, is the rising cost of living and the failure of wages to keep pace. There is no sign of that pressure lifting in 2013. Even if the headline growth figures settle on the positive side of the graph, the long stagnation in average pay – a phenomenon in evidence roughly since 2003 – will leave most households feeling no better off.

The cruellest month

Many will be hit by tax and benefit changes due to come into effect in April. Deferred cuts to child benefit and tax credits will kick in. As the squeeze on local authorities tightens, nonessential services will start to disappear and essential ones will look shabbier.

The Lib Dems hope to win friends with their flagship policy of raising the personal allow - ance for income tax. April is when the additional money should start boosting pay packets for low-income families. That is also when council-tax reforms – and cuts to the support for those who can’t pay – come into force. With the arrival of the new system, bills will be landing on the doormats of families that have never previously faced the levy. Many will already be struggling to keep their heads above water. In town halls across the country, this change is said to be a potential shredder of popularity on a par with the poll tax.

Also in April, the cap on the overall level of benefits that any household can receive will take effect. George Osborne has sold this as a device to thwart those idlers whose lavish lifestyle on the dole is funded by the taxes of their toiling peers. In practice, the main outcome of the cap will be to deny housing benefit to poor families with several children and living in London, where rents are high even for miserable housing. There will be a forced march towards cheaper slums in areas away from the capital, where services will be strained and homelessness will rise.

There is no guarantee that this displacement will change attitudes towards what has been a popular policy. It will certainly cause aggravation for local authorities and for the MPs who find their advice surgeries overflowing with benefit-cap refugees.

There is an entrenched suspicion in much of the country that the social security system has been routinely corrupted to transfer scarce resources from the industrious to the idle. Exploiting that resentment is central to the Conservatives’ political strategy as devised by Osborne, and 2013 will be the year that the Chancellor’s judgement in that respect will be tested. His calculation is that Britain’s appetite for welfare cuts is boundless and that Labour can be trapped into an unelectable defence of hated handouts for layabouts.

Osborne plans to make parliament vote on a bill that will limit the proportion by which benefits can rise to 1 per cent per year for three years – a cut in real terms. He expects Ed Mili - band to oppose the measure and, in so doing, to dig himself into a hole. He envisages the opposition setting up camp on a pious lefty fringe from where the votes that decide marginal constituencies are beyond reach.

Privately, some members of the shadow cabinet fear that he is right. Labour’s opinionpoll lead reflects the aggregation of anti-Tory impulses drawn from the Labour core vote and left-leaning former Lib Dems. If sustained, that bloc could be enough to stop the Tories from winning a majority but it cannot win outright victory for Labour. To take his lead into commanding territory, Miliband has to appeal to precisely the segment of the electorate that Osborne thinks can be sealed off from Labour with benefit cuts. “It’s obvious where our next set of votes has to come from,” says one shadow cabinet minister. “It’s all those people who don’t trust us on welfare – it may not be comfortable, but that doesn’t mean it isn’t true.”

It isn’t just Labour’s record of benefit spending that holds the party back from sealing the deal with swing voters: those on low to middle incomes who feel financially exposed and politically neglected. They are just as wary of the last government’s perceived laxness in controlling immigration, which they see as driving down wages, crowding British workers out of the job market and swamping public services.

One of Miliband’s earliest recognised accomplishments was to identify the “squeezed middle” as a social and economic phenomenon earlier than his rivals. In theory, those families surviving on modest means should be receptive to the Labour leader’s call for a grand reordering of the way wealth and opportunity are distributed. They are likely to be hit hard when the April cuts commence and also to harbour resentment of a Tory high command drawn from the ranks of inherited privilege. Yet Miliband’s soft-left sensibilities are less easily applied to the social attitudes that often accompany economic insecurity. There is no easy extrapolation from individual hardship to collective solidarity. On the contrary, austerity often drives conservative impulses.

Miliband’s gamble for 2013 is that voters will recoil from the social consequences of the cuts, seeing them not as the necessary price of consolidating the Budget but as a familiar symptom of Tory flint-heartedness. For that response to benefit Labour, the party needs a coherent account of how it would manage the same financial challenges in less brutal fashion. But neither Miliband nor Ed Balls wants to spell out speci - fic cuts that they would make in government – or coalition measures they would keep.

When challenged about this reticence, Balls’s allies point out that he has already signed up to a public-sector pay freeze, provoking the fury of the trade unions in the process. Any more detailed chalking-up of services for the chop would, according to the Labour leadership, tie the opposition’s hands prematurely and concede the terms of that battle to the Tories. In a competition to prove who would be less squeamish about wielding the axe, the coalition parties have the obvious advantage.

Senior figures in Labour think that this is a risk worth taking. Voices are often raised around the shadow cabinet table urging clarity about spending priorities as a precondition for getting the attention of voters who still don’t trust the party with their money. Miliband has chosen another path. His conviction is that there is appetite for an entirely new way of talking about the challenge facing the country. It starts with the premise that the coalition destroys while Labour rebuilds.

Under a groove

This is the essence of the “One Nation” theme that Miliband set out in his 2012 party conference speech. It was an audacious raid on a Conservative idiom – Benjamin Disraeli’s offer to heal class divisions – deployed as an attack on coalition policy and a projection of Labour ambition. There can be no overstatement of the importance of “One Nation” to Miliband’s project. At their first meeting after the conference, shadow ministers were instructed to find ways to organise their portfolios under the new rubric. Miliband wants to fight an election in which voters ask themselves not which party flinches least when carving up scarce resources but which party most wants to unite the country in shared economic and social endeavour.

Osborne’s renewed assault on welfare in 2013 will provide an early and possibly decisive test of whether Miliband’s ambitions are plausible. He thinks the Tories have blundered by failing to account for the numbers of people who receive benefits and also have jobs. They might not take kindly to the Chancellor’s message that having the state contribute to their meagre incomes is a mark of moral depravity: scrounging, in other words. Labour hopes to present the below-inflation uprating of benefits as a “tax on strivers” – yet another Tory blow to the ambitions of people who want to get on in life and find the odds stacked against them. “When Ed talks about welfare it will be on his own terms and at a time of his choosing,” says a close aide of the Labour leader curtly when asked whether Osborne’s cuts will be accepted or rejected.

As Miliband sees it, the trap can be circumvented by highlighting the cynical motives behind it. Labour, in that scenario, would decry the Chancellor’s fomentation of discord at the bottom of the social ladder as cynical cover for his favours to those at the top. Osborne’s decision last year to cut the 50p top rate of income tax is an endless rhetorical bounty for Labour. It is held up as a monument to twisted priorities; a policy for two nations – the rich and the rest.

There are Labour MPs who struggle to see how Miliband’s refusal to accept the terms of Osborne’s trap is any different from walking blindly into it. Their fear is that the leader and some of his advisers are trying to make a point about the British electorate, proving that the country is more amenable to social-democratic messages than Tony Blair and the architects of New Labour thought possible. This notion, the sceptics fret, owes more to wishful thinking than evidence.

That is certainly the view in Downing Street, where Miliband’s strategy is seen as a re-enactment of Neil Kinnock’s failed election bid in 1992 – an extended complaint about social in - justice that leads to confiscatory tax plans that will be rejected on polling day. Cameron’s confidence is bolstered by opinion polls showing that the Labour leader is lagging in measures of strength and charisma. The Tories are pinning their hopes on a presidential-style campaign, inviting voters to consider which party leader has the courage to see through the task of consolidating the Budget. The message, in the words of one Cameron ally, will be “you can’t change the general in the middle of a war”, the assumption being that undecided voters perceive Miliband as an awkward and improbable figurehead in times of economic emergency.

That obstacle will be hard to overcome, but Miliband now enjoys immunity from being written off. Most Tories and a chunk of Labour presumed that his elevation to the leadership in 2010 heralded a period of self-absorbed meandering in the wilderness of opposition. That it has proved otherwise is attributable substantially to the coalition’s weird dedication to unforced error. The government has malfunctioned frequently and spectacularly enough to make Miliband look like a contender by default.

But even his critics have been forced to accept that the Labour leader has stores of resilience. Politics is not indulgent of amateurs. Even with the advantage of having opponents who are self-harming, Miliband would not have survived and grown in stature as he has done without strategic intelligence to guide his response.

Those Labour MPs and shadow ministers who stalked parliament in a sulk of defeatism at the start of 2012 are warily optimistic. What they once lamented as Ed Miliband’s indecision they now concede might be the incremental advance of a man playing a long game. The less enthusiastic among them recall, however, that the last Labour leader in whom it was hard to distinguish between strategy and caution was Gordon Brown, under whom Miliband served his apprenticeship.

There are still many gaps in the story Labour wants to tell about how it would run the country. There is no One Nation answer to the question of how we can afford to sustain public services in an age of tight budgets, or what a One Nation European policy would look like, or whether academies and free schools are part of a One Nation education policy.

Miliband’s policy prospectus still wilts under interrogation. The crucial advantage he has is that his party is united in willing him to succeed. The same cannot be said of Cameron. There are not yet enough rebels in the Tory ranks to unseat the Prime Minister, but there are enough malcontents who would take pleasure in watching him fail. That alone cannot secure Miliband’s safe passage into Downing Street. The Labour leader has much to do if he is to look the obvious candidate to be Britain’s next prime minister. Yet nothing about his career to date has been obvious. Miliband is a politician who seems to invite underestimation; so far it has served him well.